Los Angeles During the 1929 Stock Market Crash

The Stock Market Crash of 1929 had a dramatic impact on the
primary stock market indices as prices declined. The Dow Jones Industrial Average declined
from 381.17 on September 3 to a low of 198.69 on November 13, a decline of
48%. The S&P Composite declined from
31.92 on September 7, to 17.66 on November 13, a decline of 45%. Was the
decline universal throughout the United States?

In the 1920s, there were a number
of regional exchanges where local stocks were listed. If a stock does an IPO today, it usually will
list over the counter where the shares can be traded electronically throughout
the United States,
but in the 1920s, there were still regional exchanges that listed regional
stocks. A stock from Illinois
would list on the Chicago Stock Exchange, one from Massachusetts on the Boston Stock
Exchange.

In California,
you had exchanges in both Los Angeles and in San Francisco. The San
Francisco Stock Exchange was formed in 1882 and the Los Angeles Stock Exchange
was formed in 1889. The two exchanges
merged to form the Pacific Stock Exchange in 1957. The Pacific Stock Exchange was bought out by
Archipelago Holdings on September 27, 2005 which was in turn acquired by the
New York Stock Exchange in 2006.

We recently discovered that the Los
Angeles Stock Exchange had a stock exchange index in 1929. We only found two articles on the index, but
we were able to obtain the values for the index for 1929 to see how stocks on
the West Coast performed relative to stocks in New York.

In an article in the Commercial and
Financial Chronicle, John Earle Jardine, president of the Los Angeles Stock
Exchange, noted that “the speculative attention soon was attracted to the
nationally known industrial and utility issues which were vigorously sponsored
by certain groups, of which issues only a few are listed on our Exchange.” Consequently, stocks on the Los Angeles
Exchange failed to rise as much as the New
York stocks and consequently, declined less.

The Los Angeles Stock Exchange
calculated a general index of 30 common stocks as well as sector indices of 10
oil stocks, 10 industrial stocks and 10 financial stocks. The indices had a base of January 31, 1929
equal to 100.

The timing of the decline in stocks
differed from New York. The Los Angeles Stock Exchange Index reached
its high on May 13 at 103.5 and declined to 73.1 on December 30, declining a
little less than 30%. The oil stocks
were hit the hardest by the crash, falling to 65.6, losing over 35% of their
value. The 10 Industrials fell to 75.8 and the Financials fell to 77.6.

The recovery from the December 30
low also varied from one group to the other.
The index of 30 common stocks had recovered to 83.3 by April 26, 1929,
the 10 oils to 78.2, the 10 Industrials to 90 and the 10 Financials to
81.2. Of the three groups, the
Industrials recovered the most quickly, and the Financials were the laggards.

Among individual stocks, utilities
apparently bounced back the strongest, including Edison, Pacific Lighting and
Pacific Gas. Standard Oil of California
and Union Gas had also fully recovered their losses by April of 1930.

Unfortunately, we were unable to
find additional information on the index.We were unable to determine either which stocks were included in the index,
who calculated the index, whether it was price-weighted or
capitalization-weighted, and what happened to the index after April 1930.

Nevertheless, it provides an
interesting insight into the 1929 Stock Market Crash. The data for the index are published below
for everyone to look over.

As part of the United States Stock
Market Project, we will be adding monthly data on stocks from both the Los Angeles and San Francisco Stock Exchanges from 1906 to
1936 and this will enable researchers to analyze in more detail how stocks
behaved during the Great Depression outside of New York.